Abstract
Sustainable Development Goal 16 talks about Peace, Justice, and Strong Institutions, and goal 10 talks about reducing inequality. A major problem exposed by the COVID-19 crisis is that public deficits seem to be the normal state in the business cycle’s booms and downturns, limiting capacity for emergencies. Corporate capitalism has an incentive to perpetuate deficits to increase growth, provide risk-free interest income to financial institutions, and to increase inequalities and economic injustice. To counter this problem, the purpose of this communication is to suggest that countries need to issue equity capital, which we term macro-equity. This macro-equity will give dividends to its shareholders in times of public surplus and issue new shares in times of public deficits. The communication is written as a mind experiment, debating the issues that may arise. This proposal raises many questions of an ethical and moral nature that will lead to passionate debate. The use of macro-equity will reduce countries’ stress, created by high public debt. With appropriate incentives, it may create an entrepreneurial mindset in political leaders that may even reduce corruption and promote redistribution. The moral and ethical issues need to be weighed against the street violence in the absence of any change.
Highlights
It has been a losing battle for democracy, and for some time, we have been talking about corporate capitalism and corporatocracy and their problems (Blanc 2014; Karadjov 2019)
Fair redistribution is beneficial to the economy, and we should expect macro-equity shareholders to be advocates of lower inequality, in line with the United Nations’ sustainable development goal 10
We have further developed a case for macro-equity for countries: equity shareholders of a country would get dividends in times of public surplus and could buy more new shares in public deficits
Summary
A first inherent tension in democratic capitalism is its tendency to centralize firms’ monopolistic power, with governments attempting to break the monopolies from time to time. It has been a losing battle for democracy, and for some time, we have been talking about corporate capitalism and corporatocracy and their problems (Blanc 2014; Karadjov 2019). Street violence may reflect the masses’ frustration at this shift of power, as inequalities have increased (Chan 2015; Piketty 2014; Stiglitz 2013) This increase in social inequalities has been heightened during the pandemic both at a local level (Dzigbede et al 2020) and at a global level since developing countries are unequipped to deal with this crisis
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